The Polish government got the green light from the European Commission to allocate 404.6 million CO2 emission allowances free of charge for energy sector modernization, the commission said in a press release on Wednesday.

"The European Commission has found that Polish plans to allocate free of charge 404.6 million carbon emission allowances for modernizing the electricity sector are in line with EU state aid rules," the commission said.

"The commission has found that the funds granted will be used to modernize production infrastructure, diversify the energy mix or build new installations," the statement read.

The Polish government is planning more than 340 investment projects to the total value of above EUR 28 billion (PLN 119 billion).

"The investments will allow Poland to diversify its sources for the production of electricity and to contribute to the expansion of national energy markets," Commission Vice President in charge of competition policy Joaquín Almunia said as cited in the statement. "At the same time the measure contributes to reaching Europe's 2020 objectives by reducing greenhouse gas emissions."